Ensign has been under investigation by the Senate Ethics Committee over whether he violated Senate rules during his affair with Cindy Hampton, a former campaign aide. Hampton’s husband, Doug Hampton, was Ensign’s deputy chief of staff during most of the extramarital relationship.

“It is with tremendous sadness that I officially hand over the Senate seat that I have held for eleven years,” Ensign said in a statement issued Thursday evening. “The turbulence of these last few years is greatly surpassed by the incredible privilege that I feel to have been entrusted to serve the people of Nevada. I can honestly say that being a United States Senator has been the honor of my life.”

GOP insiders speculated that Ensign was stepping down to avoid a public report from the Ethics Committee. Ensign had already announced that he was retiring next year, citing the political damage that his career suffered from the scandal.

“While I stand behind my firm belief that I have not violated any law, rule, or standard of conduct of the Senate, and I have fought to prove this publicly, I will not continue to subject my family, my constituents, or the Senate to any further rounds of investigation, depositions, drawn out proceedings, or especially public hearings,” Ensign said. “For my family and me, this continued personal cost is simply too great.”

Hours after the Ensign news broke, the two leaders of the Senate Ethics Committee — Sens. Barbara Boxer (D-Calif.) and Johnny Isakson (R-Ga.) — issued a short statement saying the panel “has worked diligently for 22 months on this matter and will complete its work in a timely fashion. Senator Ensign has made the appropriate decision.”

Ensign’s surprise announcement, coming in the midst of a two-week congressional recess, caught party leader on both sides of the aisle off guard. Senate Majority Leader Harry Reid (D-Nev.), who is traveling in China, issued a statement praising his one-time opponent, but there were few other expresssions of regret at his departure. Ensign has become an outcast within his own party since the scandal broke in mid-2009, and many of his colleagues are privately happy to see him go.

“From fighting Yucca Mountain in southern Nevada to protecting Lake Tahoe in the north, I have appreciated John’s partnership in working with me to address our state’s needs,” Reid said in a statement released by his office. “My relationship with the Ensign family began many years ago with his father, Mike, a pioneer who has been a force in Nevada gaming and tourism for decades. I know this is a difficult time for the family and I wish them all well as they work through it.”

Ensign’s resignation could clear the way for Nevada Gov. Brian Sandoval, a Republican, to appoint GOP Rep. Dean Heller to fill Ensign’s seat, giving the congressman an upper hand as he pursues a full term in 2012.

If Sandoval taps Heller as Ensign’s replacement, the Nevada governor would be required to call a special election to take place in six months, once he officially designates Heller’s 2nd District House seat vacant, according to state law.

Sharron Angle and former military commander Kirk Lippold are already in the race for Heller’s seat. Angle ran against Senate Majority Leader Harry Reid (D-Nev.) last year but lost. That campaign, though, gave Angle a statewide and national profile and makes her a potentially formidable candidate in the race to replace Heller.

Under Nevada law, the state parties would chose their candidate for a House special election without holding a primary. If Angle is not chosen in that process, Democrats are already speculating that she could file a petition to run as an independent candidate.

Ensign, 53, was first elected to the House in 1994 as part of the “Republican Revolution” that ended 40 years of Democratic control of that chamber. A casino exec whose parents grew wealthy in the business, Ensign challenged Reid in 1998 and almost defeated him, only losing narrowly in a recount. Ensign won an open-seat race for the Senate in 2000.

Before his career was derailed by the sex scandal in June 2009, Ensign was a rising member of his party’s Senate leadership, holding the chairmanship of the National Republican Senatorial Committee and Republican Policy Committee, and he had been seen as a possible presidential candidate.

The Hamptons had sought millions of dollars in payments from Ensign to keep quiet about his affair with Cindy Hampton, which Ensign refused to pay. Ensign’s family did give $96,000 to the Hamptons, including their children.

The Justice Department also looked into Ensign’s efforts to get Doug Hamptonlobbying work after he and his wife had left Ensign’s payroll in early 2008, but no charges were ever filed and the federal criminal probe was dropped. Doug Hampton has been charged with seven counts of violating a one-year lobbying ban on former top congressional aides.

But the Ethics Committee continued to look into the matter, and a special counsel — Carol Elder Bruce — was recently appointed to take over the case.